risk
Playing to Win, versus Playing Not to Lose
Life is funny. There are always ways to justify nearly anything you want (or don’t want) to do. For example, “The timing is not right” (“We’re not ready,” “The market will be better soon,” “We need to save more,” “We need to staff up first,” etc.) Justifications often include things like “We had a bad experience once” or “We are a very conservative organization” – comments that tend to lean towards risk aversion or a lack of confidence.
I’ve seen this in my own business after a large investment failed to yield the desired results, when I was a regional sales and services leader at a “growth-oriented” software company, and as a consultant. The root cause always varies, but the net effect is that those companies play it safe.
Why is that a problem? It may not be. Being content may not be a bad thing. Sometimes the status quo is enough. Having a reliable schedule, manageable stress levels, sufficient funds, and doing something you like with people you like may be the goal. But not everyone is built that way.
Growth usually means stepping out of your comfort zone, taking on risk, recognizing the need to adapt to stay ahead of the curve, and being OK with uncertainty. It means bringing on people with different backgrounds, skill sets, and perspectives than yourself. It can be very hard – especially if you are used to being in control and having the answers.
For me, the solution was twofold.
- We had to accept failure as an inevitable outcome. I believe this is where a lot of people stop. If you view failure as negative, then everything that stems from it (loss of money, a hit to your ego, and other setbacks) becomes your focal point. Lesson Learned: When you view it as a learning and self-improvement opportunity (“cognitive reframing”), it just becomes part of the cost of getting better.
From your team’s perspective, if everyone is as focused on the journey as you are on the outcome, people tend to view challenges logically rather than emotionally (thereby controlling fear). Success truly is a mental game. - We developed a structured approach for future investments (read more about it here). We treated each new venture like a project. It was focused, analytical, and unemotional. With this approach, speculative investments became easier each time. It’s amazing how that distance also helps switch the focus from risk to reward.
This understanding led to a presentation I gave that helped relaunch a company, helped several clients critically assess the risks and rewards of their plans, and may help someone consider whether they are focused on winning or simply on not losing.
As Richard Branson wrote in his book, Screw It, Let’s Do It: Lessons in Life, “If you opt for a safe life, you will never know what it’s like to win.” So, are you ready to play to win?
Lessons Learned from Small Business Ownership
I learned many valuable lessons over the course of the 8+ years that I owned my consulting business. Many were positive, a few were negative, but all were educational. These lessons shaped my perceptions about and approaches to business, and have served me well. This post will just be the first of many on the topic.
My lessons learned covered many topics: How to structure the business; Business Goals; Risk; Growth Initiatives and Investment; Employees and Benefits; Developing a High-Performance Culture; Marketing and Selling; Hiring and Firing; Bringing in Experts; Partners and Contractors; The need to let go; Exit Strategies and more.
In my case, these lessons learned were compounded by efforts to start a franchise for the consulting system we developed, and then our expansion to the UK with all of the challenges associated with international business. Each new effort built on the success and lessons learned from those previous efforts.
It’s amazing how more significant those lessons are (or at least feel) when the money is coming out of or going into “your own pocket.” Similar decisions at larger companies are generally easier, and (unfortunately) often made without the same degree of due diligence. Having more “skin in the game” does make a difference when it comes to decision-making and risk. I believe that this experience has made me a better leader, custodian of business, and employee – all because of this newfound understanding.
Businesses are usually started because someone is presented with a wonderful opportunity, or because they feel they have a great idea that will sell, or because they feel that they can make more money doing the same work on their own. Let me start by telling you that I believe the last reason is usually the worst reason to start a business. There is a lot of work to running a business, a lot of risk, and many expenses that most people never consider. You start a business because you are running toward something big, and not because you are running away from something.
I started my business because of a great opportunity. There were differences of opinion about growth at the small business I was working for at the time, and this gave me the opportunity to move in a direction that I was more interested in (shifting away from technical consulting and moving toward business/management consulting). Luckily, I had a customer (and now good friend) who believed in my potential and the value that I could bring to his business. He provided both the launch pad and safety net (via a three-month initial contract) that I needed to embark on this endeavor. For me, the most important lesson learned is to start a business for the right reasons.
More to come. And, if you have questions in the meantime, just leave a comment, and I will reply. Below are some of the statistics on Entrepreneurship that can be pretty enlightening:
Bureau of Labor Statistics stats on Entrepreneurship in the US
Where Ideas, Experiences, and Lessons Learned Intersect 